CHAPTER
14
Developing Merchandise Plans
RETAIL
MANAGEMENT:
A STRATEGIC
APPROACH
AGENDA

Administrative
Retail Institutions Debrief
 Newswatch Assignment Overview


Discuss Merchandising Philosophy
Introductory concepts
 Category Management
 Manufacturers go online

WHAT’S HAPPENING IN RETAIL?
Sears to sell 4 locations
 HMV finally gets into digital apps

MERCHANDISING
Activities involved in
acquiring particular goods
and/or services and making
them available at the places,
times, and prices and in the
quantities that enable a
retailer to reach its goals.
MERCHANDISING PHILOSOPHY
 Sets
the guiding principles for all the
merchandise decisions that a retailer
makes
 Should reflect:
Does JC

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Target market desires
Marketplace positioning
Retailer’s institutional type
Defined value chain
Supplier capabilities
Costs
Competitors
Product trends
Penney’s move to
a store-within-astore concept with
Joe Fresh reflect
all of these
things?
SCOPE OF RESPONSIBILITY
Merchandising view
Buying view
 All buying and selling
functions
 Buyers manage buying
functions
 In-store personnel
manage other functions
Assortments
Advertising
Pricing
Point-of-sale displays
Employee utilization
Personal selling
approaches
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Assortments
Point-of-sale displays
Employee utilization
Personal selling approaches
MERCHANDISING V. STORE
MANAGEMENT CAREER TRACKS AT
HBC
TWO MERCHANDISING STRATEGIES
Micromerchandising
Retailer adjusts shelf-space allocations to respond to
customer and other differences among local markets
Cross-merchandising
Retailers carry complementary goods and
services to encourage shoppers to buy more
Is cross-merchandising different from scrambled merchandising?
SCRAMBLED MERCHANDISING
BUILD-A-BEAR WORKSHOP

www.buildabear.com
CHOOSE ME
HEAR ME
STUFF ME
STUFF ME
FLUFF ME
DRESS ME
NAME ME
BUILD-A-BEAR WORKSHOP
Target Market
 Positioning
 Describe BABW’s merchandising plan

MERCHANDISING PLANS
BUILD-A-BEAR ASSORTMENT
RETAIL
ASSORTMENT
STRATEGIES
EXAMPLES??
FORECASTING - TYPES OF MERCHANDISE

Necessary to distinguish b/w types of merchandise
when forecasting:

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Staple merchandise (i.e. ‘Bearemy’)
Assortment merchandise
Fashion merchandise (clothing)
Seasonal merchandise (Christmas, Halloween, Easter)
Fad merchandise
PLANNING MERCHANDISE INNOVATIVENESS

Your text lists a variety of factors retailers need
to consider w.r.t. merchandise innovativeness
 Customer considerations

Target market conservative or
innovative?

What segments exist?

Responsiveness to their needs

Fashion trend demand
(vertical/horizontal)
 Competitive considerations
 Operations considerations

Amount of investment

Growth potential
Be aware of the

Profitability
product’s life

Risk
cycle

Impact on image

Trade-offs (de-listing older merchandise)
STRUCTURED GUIDELINES FOR
PRUNING PRODUCTS
1.
2.
3.
4.
Select items for possible elimination on
the basis of declining sales, prices, and
profits, appearance of substitutes
Gather and analyze detailed financial
and other data (such as core customer
preferences) about these items
Consider nondeletion strategies such as
cutting costs, revising promotion efforts,
adjusting prices
After making a deletion decision, do not
overlook timing, parts and servicing,
inventory, and holdover demand
BRANDS - MERCHANDISE QUALITY
 The
battle of the brands p. 366
Manufacturer
(national)
Private
(dealer or store)
Generic
SUNRIPE PRIVATE LABEL STRATEGY
Describe Sunripe’s Retail Strategy Mix.
 What is Sunripe’s Retail Value Proposition?
 Describe Sunripe’s merchandising plan.
 Describe Sunripe’s private label products.

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What are the advantages and disadvantages of
private label products generally?
Describe the private label buyer generally.
How important are private labels to the Sunripe
customer?
What should Sunripe do to leverage its private
labels and continue to grow its business?
FIGURE 14.9
RETAIL
ASSORTMENT
STRATEGIES
PRIVATE LABEL PRODUCTS
Advantages
Control
 Profit margins higher
 Competitive
differentiation
 Can generate loyalty
(quality dependent)

Disadvantages
Lower brand
equity/awareness
 Perceived lower
quality
 No manufacturer
promotional support
 Do not drive traffic as
well as national
brands

WHAT IS CATEGORY MANAGEMENT?
A Retailer/Supplier process of managing
categories as strategic business units,
producing enhanced business results by
focusing on consumer value
• Category Management is a Process and involves a series of interrelated
activities
• Category Management is comprised of distinctly different supplier and
retailer components and cannot be done alone by either
• Category Management has been shown to lead to improved business
results and improved relationships between trading partners
CATEGORY MANAGEMENT
Traditional Business Practices
Retailer
Manufacturer
Develops Store-Level
Marketing Plans
Develops Marketing Plans
and Programs for Brands
Implementation
Category Management Practices
Retailer & Manufacturer
Category Planning
Implementation
A NEW WAY OF DOING BUSINESS
OLD
NEW
Brand/SKU Management
Category/Brand/SKU Management
Retailer Focused Tactics
Consumer Focused Tactics
Deal-Based Decision Making
Data-Based Decision Making
Reactive Business Planning
Proactive Business Planning
Adversarial Work Process
Collaborative Work Process
FIGURE 14.13
APPLYING
CATEGORY
MANAGEMENT
SHELF LOGIC: SOFTWARE FOR CATEGORY
MANAGEMENT PLANNING
CATEGORY CAPTAINS
What is a Category Captain?

an appointed lead supplier who carries out the category
review and leads the process to deliver the plan for the
total Category
The Category Captain must:

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have a demonstrable knowledge of customer insight and
market understanding
take an objective approach to growing the overall
category
recognize the role of other suppliers in delivering the
goal
MANUFACTURERS GO ONLINE

Would you ever buy a consumer product online?
Why or why not?
 Probably in rare instances
Most of these products are consumables that are
considered convenience purchases
 There’s an immediacy
 Consider shipping costs

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Will this venture be successful?

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If the goal is to apply some pressure in the supply chain,
then possibly
If the goal is to move a majority of the manufacturer’s
business online, then no
Retailers still create significant place value

http://www.emarketer.com/Article.aspx?R=10088
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